Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: VAT RATES :: form 3cd :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: due date for vat payment :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company
 
 
News Headlines »
 Reforming the income tax tribunal
 How the new system might impact consumers and businesses
 10 ways you get benefited from filing your tax return
 Returns under CGST Act,2017 with Rules
 Ten facts to know about filing income tax return this year
 The Ten Commandments of Tax Filing
 How to claim income tax refund
 How to time your buys to have best of two tax regimes
 Here's why you must always check Form 26AS before filing tax return
 Want to file your income tax return after June 30? Having Aadhaar card is a must
 Timeline for filing of tax returns extended by two months

Incomes that are not taxed!
July, 29th 2009

Although the tax man has been vested with the task of collecting taxes on the incomes of the citizens, he has deemed certain kinds of incomes as "not included in total income". Thus if any earning that you receive which falls under these incomes you don't have to treat it as income or pay tax on it! Let's take a look at the different incomes that are not incomes!

Agricultural Income
Any income which you receive as income from any agricultural activity is deemed as not included in total income. If your father is into agriculture and he gives you a part of the income as a gift, then you don't need to pay tax on it, provided, your father files his tax returns.


Income for being partner in a firm
If you receive any income for being a partner of a firm which has already been assessed separately then the income need not be included in total income. Thus any share in the profits that you have in a firm according to the partnership deed is not taxable.

5000 Rupees
An amount of Upto Rs 5000 which you receive for any reason other than as prize money and are not a recurring amount can be excluded from your total income. It seems to be a very small amount but sometimes this could be the difference between being in a higher slab or a lower slab.

Travel concession/assistance
Any monies that you receive from your company for the purpose of travel to any place in India along with your family for the purpose of leave. The claim can be made two times in a bucket of 4 years. Family includes Wife and children and also parents, brothers or sisters if they are dependent on you. The only check being that you have to maintain original bills to prove travel if the IT department asks for it.

Retirement/Death gratuity
Any payment received under a pension or death cum retirement gratuity scheme by an individual or his widow, children or dependents. The gratuity should not be more than the number of years in service multiplied by half months salary based on a ten month average. For example if the average salary for the previous ten months prior to receiving gratuity is 10000 and years in service is 15, then 15x5000=75000/- would be not included in total income.

Leave Salary
Any cash amount received as compensation for earned leave which is en-cashed at the time of retirement. (This applies only to employees of Central/State government). For employees other than government employees, the Leave salary can be en-cashed up to a limit of ten months worth of earned leave. It also specifies that the entitlement to earned leave should not exceed 30 days for each year of service. For example if you have 76 days of earned leave and total years of service is 2 years, then, only the cash equivalent of 60 days of earned leave is not added to income.

Retrenchment/Voluntary retirement
Retrenchment

Any compensation received by a workman due to the closure of his company or change in the management of the company if new terms are less favorable than what was previously applicable.

Voluntary retirement

Any amount up to a maximum of Rs 5 lakh paid at the time of voluntary retirement in accordance with and scheme of voluntary retirement of the company. But, the company paying the VRS should have a framework for VRS as prescribed by the government.

Insurance/Provident Fund
Life Insurance Policy

Any amount received as benefit from a life insurance policy including bonus payment is not included in total income. The only exception is the amounts paid as part of Key-man policies.

Provident Fund

All payment which is received from a provident fund to which the PF act applies or any PF fund of the Government is not included in total income.

Superannuation/Rent
Superannuation

Any payment made from a superannuation fund on the death of the beneficiary or as a refund of contributions or if the employee becomes incapacitated before retirement.

Payment of Rent

Any allowance paid by an employer to an employee to meet expenditure actually incurred on the payment of rent for accommodation. But this is not allowed if the house is owned by the employee or he has not incurred the rental.

Income from government securities
Any earnings from interest, premium on redemption or other payment on securities, bonds, annuity certificates, savings certificates and other instruments issued by the central government and also deposits taken by the central government.

In case of non-residents if the bond have come to us by virtue of being a nominee or survivor on the non-resident or if they have been gifted to us by a non-resident Indian who have purchased the instrument in foreign exchange and the principal and interest will not be taken out of India by the recipient of the gift, the amounts will not be added to income.

Scholarships for Education are not included in total Income.

Awards, Rewards/Relief funds
Awards and Rewards

All payments receive in cash or kind as an award given by the Central or State Government or by a body recognised by the central government to give such awards will not be included in the total income.

Relief funds

Any amounts which are received by an individual as part of the Prime minister's national relief fund or the promotion of folk art fund or students fund or foundation for communal harmony will be treated as not included in income.

Conclusion
Thus we see that although the tax man is mostly portrayed as a villain in many media, he has been liberal enough to give us the benefit of income tax free income from so many sources.

The above learnings can be applied to our personal lives in two ways.

1. Try to increase the income if any coming under any of the above heads.

2. Invest in any of the tax free avenues given above so that we may get the benefit of the investment as well as tax free income when it comes to our hands later on.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Customer relationship management software CRM software Operational CRM Collaborative CRM

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions